Family Constitution’ key to ensuring legacy of family business, says Savills

“The primary reason that family businesses fail is the inability of family members to find an effective way to work together for the good of both the family and the business”, says Charlie Seligman, Director of Rural at Savills Winchester.

According to Seligman and his team, who provide advice on rural family business issues, the founders of family businesses are often both proud and apprehensive about involving their children in it.  Whilst the next generation appears to have a sound knowledge of and interest in, the business itself can become highly complex not just in terms of strategy but also relationships. 

He comments: “Family businesses can succeed for some years often without the kind of formal structure and governance you might expect from a small business. This doesn’t present a problem in itself, but when the time comes for the business to be passed on to the next generation, significant issues arise. These range from questions of ownership and leadership through to confusion over job roles and remuneration.

“The resolution of these issues can take some time and all the while the service being provided to clients or customers is put at risk.”

One tool which is key to ensuring the legacy of a family business is the ‘Family Constitution’. 

Seligman continues: “The family creed or constitution is a means of recording and enshrining the DNA of the family and its business, what it wants to achieve and how decisions will be made. It is a living document which needs to be reviewed on a regular basis. 

“It defines the purpose and vision of the company, sets a framework of rules and agreements which govern the business, and lays out communication and conflict resolution policies and guidelines for what happens when a member of the family wants to leave the business.

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“Dealing with conflict will almost certainly be part of the journey for most families and unless a way of dealing with that conflict can be found entrenched positions will become exacerbated. It is important to stand back and look at the big picture and to understand the motivation of the individuals involved and the pressures upon them.  This can be very difficult indeed in family groups.”

For further details and advice on family business issues, contact Charlie on 01962 834016 or